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Foreign banks turn to parent companies for capital boost
An Ecobank branch in Thika town. Last week, Ecobank TransNational, the Togo-based owner of Ecobank Kenya, injected $27 million (Sh3.5 billion) into its local subsidiary, bringing its total capital to Sh8.5 billion.
The subsidiaries of foreign banks with a presence in Kenya have turned to their parent companies for capital support, as the Central Bank of Kenya (CBK) demands higher core capital levels for lenders starting from December 2025.
The apex bank expects all licensed banks to have a core capital of at least Sh3 billion by year’s end, Sh5 billion by the end of 2026, Sh6 billion in 2027, Sh8 billion in 2028, and Sh10 billion at the end of 2029.
Foreign banks are now banking on their larger parent firms for the required capital boost amid a push by the CBK.
For instance, Islamic lender Dubai Investment Bank (DIB) has revealed that its parent company - the UAE based Dubai Islamic Bank PJSC stands ready to not only enable DIB to meet its capital requirements but also meet arising liquidity challenges.
“The bank has a credit line of $52 million (Sh6.7 billion) with the parent firm from which it can draw on a need basis to mitigate short-term liquidity mismatches,” Dubai Investment Bank says in its latest annual report.
“In addition, the parent company is fully aware of its responsibilities on capital adequacy requirements and has undertaken to maintain the minimum required capital in DIB Bank Kenya Limited under the Banking Act or as amended from time to time.”
DIB says it closed 2024 with a 12-month liquidity gap of Sh8.1 billion and a retained earnings deficit of Sh4 billion.
The bank however met all its capital requirements as of December 31, 2024, in line with CBK’s directives, ending the year with a core capital of Sh4 billion.
DIB returned to profitability in 2024, booking a net profit of Sh32.4 million to reverse a Sh199.2 billion loss in 2023.
Last week, Ecobank TransNational- the Togo-based owner of Ecobank Kenya injected $27 million (Sh3.5 billion) into its local subsidiary, bringing its total capital to Sh8.5 billion ($65 million) and putting the lender on the course to meeting the 2029 Sh10 billion core capital requirement.
The additional capital is expected to help the bank with key drivers including regional businesses, SMEs, fintechs, and women-led enterprises.
The injection is also expected to enhance the bank’s presence in sectors including agriculture, manufacturing, ICT, innovation, payments & remittances, and tourism and hospitality.
“Kenya is a strategic market for the Ecobank Group and a key economic hub driving growth across East Africa. This capital reinforcement supports Ecobank Kenya’s ability to seize new business opportunities and deliver long-term value for stakeholders- all in alignment with our growth, transformation, and returns (GTR) strategy,” said Ecobank Transnational Chief Executive Officer Jeremy Awori.
Other banks with foreign ownership who might turn to their parents for capital boost include UBA Kenya, Habib Bank AG Zurich, and Commercial International Bank Kenya.
CBK wrote to 24 banks whose capital levels were below Sh10 billion earlier in the year, asking them for details on how they intend to raise new funds to satisfy the enhanced capital adequacy levels.
